IMF chief sees ‘high degree of uncertainty’ in the global outlook

WASHINGTON (Reuters) – The head of the International Monetary Fund said Monday that the global lender needs more resources to help heavily indebted countries, citing a highly uncertain global economic outlook and growing divergence between rich and poor countries.

IMF Director Kristalina Georgieva, who has long advocated a reallocation of the IMF’s own currency, Special Drawing Rights (SDRs), said that by now getting more money to tackle both the health and economic crisis, and the transition to a digital and green economy.

Under outgoing President Donald Trump, the United States, the IMF’s largest shareholder, has blocked such a new SDR allocation, a move similar to a central bank printing money, as it would provide more resources to wealthier countries as the allocation proportionate to their shareholding.

Swedish Finance Minister Magdalena Andersson, the new chair of the IMF’s steering group who spoke with Georgieva at an online press conference, said it was clear that the need for liquidity remained high, and that she would consult Member States on options to expand liquidity.

Andersson, the first European to head the International Monetary and Financial Committee and the first women in more than 12 years, began her three-year term here in the role on Monday.

Georgieva said the IMF had rapidly increased concessional funding to emerging markets and emerging economies, including through member state donations of about $ 20 billion in existing SDRs. That would continue to play an important role, but further steps were needed, she said.

“It will remain so important, even more importantly, for us to expand our capacity to support countries that have fallen behind,” Georgieva said.

She said a new SDR allocation has never been taken off the table by IMF members, she said, adding that some members continued to discuss it as a possible step. A possible sale of gold from the IMF’s reserves would have “some opportunity cost” to the IMF, but would be up to members, she said.

She said she expected the Group of 20 Major Economies to extend the current moratorium on official debt service payments by the poorest countries, which would now end in June, but much would depend on the pace of vaccinations in the coming months.